In relation to Virginia Postrel's NYT jobs piece, a commenter named SemiPundit wrote on Bill Hobbs' site that:

Ms. Postrel must have needed to knock out something quick and easy before rushing out to lunch.

What I got from her article was the rosy picture that if one loses a well-paid programming job to offshoring, there is always a bright future in cutting stone and giving facials.

Stonecraft is hardly a burgeoning new technology, since the ancient Greeks and Romans got to be pretty good at it. Besides, the market for extremely expensive granite countertops is quite limited--hardly affordable to those who earn a livelihood giving facials.

Where are we headed with a trend like this--to an interconnected network of cottage industries? Next thing, we'll be operating on the barter system.

First, it's obvious that stonecutting and facials are just examples and not intended to be an exhaustive list of undercounted jobs. I know plenty of programmers who lost their jobs and then went into business for themselves.

Further, where are we headed with a trend like this? I don't think SemiPundit is far off in suggesting that "an interconnected network of cottage industries" is in our future -- but I don't think that's a bad thing.

The main advantage corporations have over small companies is economy of scale. By (in theory!) streamlining management and facilitating communication between divisions, a corporation should be able to use the same resources more efficiently than could several small companies trying to work together to accomplish the same task. However, with the creation of the internet and the continual ascension of the service sector, it's not evident that large corporations will continue to maintain this advantage forever.

It may be that new technology is gradually making large corporations obsolete in some industries. Now, car manufactuing will require huge factories with thousands for workers for a long time to come, but the same isn't true for many other fields, particularly in high-tech. There are many advantages to working for yourself or working for a small company, and as technology allows small companies to be as efficient as large corporations (on an ever-increasing scale) I expect our economy will continue to shift.

Does that mean we'll return to bartering? Not likely, because money is simply too useful, and would become even more so if resources and production become further decentralized. I think SemiPundit was asking this question rhetorically, however.

What's ironic is that such a "an interconnected network of cottage industries" -- brought about by capitalism -- would be a better fulfillment of Marx's dream than communism and socialism have ever brought about.

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